How SAP Makes the Business Case for Sustainability

MIT’s recent study, The Innovation Bottom Line, makes a compelling business case for sustainability. In sum the message of the study is: more companies view sustainability as a core business driver. The benefits companies can score include a culture of innovation and improved brand reputation. The study has some methodological flaws, but overall provides more ammunition to the case that heightened focus on social and environmental issues matters to business.

SAP is one company with a leading record on how the transformation of a business model can not only lead to increased profits but a smaller impact on the earth and local communities. In a telephone interview with SAP’s Chief Sustainability Officer Peter Graf, he shared with me some of the approaches the company’s 60,000 employees across the globe are tackling to change how this enterprise software giant conducts business.

“The key hurdle is to ensure that sustainability is built into how the company creates value.” - Peter Graf, CSO, SAP

The MIT study suggests that embedding sustainability within an organization involves a culture of doing things differently--not just making a product “green.” What is interesting about SAP’s focus on sustainability is that in several instances, the company’s approach towards solving an internal problem ended up causing not only changes within the company’s culture, but led to new products for its customers. And in SAP’s case, the company made a difference by doing what it does best: coding better software for itself and then its customers.

One software solution started with SAP’s executive team taking a look at how the company’s employees were commuting to work. Graf and his team realized that every day the distance SAP’s employees commuted was enough to drive to the moon, back to earth and then return to the moon. In addition to the development of telecommuting policies and capping the amount of emissions company cars could emit, the company’s engineers developed a system that seamlessly allowed employees to see which of their colleagues were available for ride sharing.

According to Graf, the spike in carpooling, including the CEO’s decision to share a ride to the office, built additional value for the company: employees sharing space in a car were sharing ideas, networking and in the end helped drive more innovation within SAP. That once internal solution for carpooling is now available to customers. A similar internal initiative to reduce energy usage pushed the company to develop an off-the-shelf solution for clients who became determined to run their facilities leaner and more ecologically. In another case, SAP pursued a computer printing system that not only reduced the number of printers throughout the company, but also required employees to enter a PIN number to prevent stacks of unclaimed documents from piling up in the photocopy room. The numbers keep adding up: in the last four years SAP has saved $250 million by implementing a bevy of energy efficient technologies and related information technology products--and again, such solutions are also available to the company’s customers.

If sustainability is a means to cement relationships between customers and other stakeholder groups, then SAP is clearly succeeding. As Graf explained to me, SAP is in a tight contest with other leading information technology firms to recruit and retain talent. Back in 2008, employee engagement surveys throughout SAP revealed low scores. But as employees have grown to understand the company’s focus on sustainability and embrace it, that percentage has increased from the upper 60th percentile to 80 percent. Meanwhile 91 percent of the employees at SAP believe that is important that SAP pursue a sustainable business path. So clearly the executive team’s buy-in makes a difference, and it never hurts that the CEO is comfortable ride-sharing in order to prove a point. But engendering a culture where over 9 in ten workers are committed somehow to a more sustainable business approach helps keep employees committed and loyal to their company--and contribute ideas that have benefits far beyond one’s office.